WTW has launched "unique" parametric insurance for sugarcane farmers in Queensland that covers yield shortfalls caused by reduced application of nitrogen fertiliser, which has doubled in cost in Australia in the past year.

The product can save urea input costs while protecting against any yield shortfall from lower nitrogen use. 

WTW says optimising nitrogen application is an important business consideration for farmers. Nitrogen Risk Insurance gives sugarcane growers flexibility and control with a parametric solution that safeguards their profitability, Account Director Russell Mehmet says.

“WTW is proud to have developed a new type of parametric insurance which pays out faster for sugarcane farmers,” he said.

Claim payments are are based on simulated yield outcomes using Bureau of Meteorology measurements including rainfall, temperature and solar radiation. Each policy is tailored to location, soil type and crop start time, and farmers can insure one, some or all ratoon blocks.

WTW says the savings on fertiliser costs could exceed the cost of protecting against reduced yield arising from reduced nitrogen rates. Historical modelling of crop yield for a selected combination is used to calculate the insurance premium.

"You set the value of cane and any payout is linked to this value. In the event of loss parameters being triggered, the claims process is automated. Farmers won’t have to lodge a claim and insurance assessment is not required,” it says.

"With urea costs doubling in Australia in the past year, prices are forecast to remain high for the foreseeable future. This unique insurance solution may help ensure that lower application of nitrogen won’t result in loss of yield revenue,” WTW says in its Nitrogen Insurance Risk flyer.

Nitrogen run off to local Queensland waterways is a cause of degraded water quality on the Great Barrier Reef, and WTW says its parametric insurance solution will allow farming practices that benefit water quality with confidence crop yield profits remain protected.